RE: Follow up to our email blast of May 7, 2010

May 17, 2010 by  
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Saint-Laurent Advisors

100 Cummings Center, 322A, Beverly, MA 01915

Tel: (978) 232-9990

Investment Advisory & Insurance Brokerage

StLaurentPro.com

 

RE: Follow up to our email blast of May 7, 2010  
 
Dear Investors

We expected a correction in the markets, such as the one that occurred last week, for while now.  That is typical of healthy, rising markets.  The foreign debt crisis was the final push but this was more than many experts anticipated.  We have seen just how much of an over reaction it was based on Mondays’ recovery.  This resembles a similar, subsequent drop which occurred in the US stock markets when TARP was voted down initially.

 

As we predicted in our email blast on Friday May 7, 2001 once the EU voted relative to credit bail outs for Greece and it’s neighbors money flowed back into the markets, especially the US markets.  This is similar to what happened after TARP was finally approved – and we saw how great a rebound the markets had then, which now seems to be sustained.  Tax payers don’t like bail outs but stock markets do, evidenced by the large gains we enjoyed in 2009 and the 1st quarter of 2010.

For some, this recent market correction was a buying opportunity.  Although we never encourage trying to "time the markets", there still may be opportunities to invest for those who have been on the sidelines with cash.  Stocks of most good companies have enjoyed strong fundamentals and profits which are projected to continue.  Companies have trimmed fat and some are even starting to hire.  Consumer sentiment is turning more positive as are executive outlooks.
 
Needless to say, we are always cautioning against any knee-jerk reaction when markets correct because it may result in large, realized losses versus short term, unrealized losses.  Note, one of the many examples of how fear can feed upon itself: My father was suspect when he noticed the large volume in Procter & Gamble and Citigroup today during the sell-off.  Read the article below for details on how fear fueled the market correction of last week.
 
We want to remind everyone that we have been repositioning some clients over the past few years in anticipation of such market volatility.  If you are among the few still considering our recommendations we suggest that now is the time to act.  In most cases volatility can be controlled by locking in some gains when they occur versus riding out the storm and wondering if gains will be there when needed.
 
As always, please contact us with questions, concerns or about any changes in your lifestyle.  We are always available to review portfolios or just talk.
 
Please check out our website at www.StLaurentPro.com and send us your comments. Make sure to send us you email so we may be able to update you quickly on any time sensitive information.
 
Sincerely,

Richard Saint-Laurent, CFP